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It would be good to announce even by a lame duck Indian administration that we will be increasing our defense budget. For the budget due in June, Pakis will make extra provisions even in a very tight economic situation and as a result prices of essential commodities and consumables will go sky high. We then just have to grab popcorn with kaapee and watch the aam abduls go A-O-A all over terroristan.

Vips wrote:It would be good to announce even by a lame duck Indian administration that we will be increasing our defense budget. For the budget due in June, Pakis will make extra provisions even in a very tight economic situation and as a result prices of essential commodities and consumables will go sky high. We then just have to grab popcorn with kaapee and watch the aam abduls go A-O-A all over terroristan.

Another idea that I am sure has been discussed before is banning all exports from India to Pakistan (including the re-importation from the middle-East). Force them to buy more expensive exports from elsewhere. This will add to inflation.

The thing with hyper-inflation (and inflation in general) is it spirals. So, as prices of essentials go up, wages have to go up, and the Government has to print even more money to pay wages and that causes inflation to go up even more.

So, exports to TSP needs to be choked and predatory capitalism needs to be practiced against TSP exports so they can’t get hard-currency.

KARACHI: Foreign investment in different sectors of Pakistan’s economy slowed down by 23% to $1.62 billion in first eight months (Jul-Feb) of the current fiscal year 2018-19 following completion of several early harvest projects of the China-Pakistan Economic Corridor (CPEC).

You are all hallucinating. Pakistan's 2nd largest export is Economic Collapse News (ECN). They send that out and sit back and collect the $$$$$B and Oiros and Renmim-Bibis and Yen that flow in, faster than the Indus in flood. So this is what a really donkeyish bullish Pakonomy looks like: No Phoren Exchange rejerbs. No petrol No aviation kerosene Floods Indian attacks Indian boycott Indians in FATFA Planes falling down Minorities starving Donkeys sick Generals with diahorrhea

Actually the increasing donkey population is an opportunity for increased see-peck cooperation.Generally in beggaristan the donkeys are exported to the Fe-Bro and then Fe-Bro processes it and sends the processed goods back to beggaristan. Everybody happy except the donkeys. The poor bakis get "bada" meat at cheap prices and the authorities get rid of the donkeys (and earn money) and Fe-Bro also earns money.

ISLAMABAD: The Islamabad Chamber of Commerce and Industry (ICCI) has expressed grave concern over the 72.5% decline in total foreign investment in Pakistan, which tumbled to $1.2 billion during July-February FY19 from $4.4 billion in the same period of last year. It urged the government to take immediate measures to reverse this trend in order to promote local and foreign investment in the country. ICCI President Ahmed Hassan Moughal pointed out that direct investment in Pakistan also fell to $1.62 billion in the period under review against $2.09 billion last year, showing a decline of 23%.“It is high time the government take measures to create conducive environment for investors,” he stressed.

LAHORE: The media commentary revolves around the timing of the International Monetary Fund (IMF) bailout programme.

One camp holds the view that the government should opt for the programme as soon as possible. It has already delayed the IMF programme, which is making the management of economy tough in the coming months. The government has delayed the needed reforms and it should approach the lender of last resort to bolster the foreign exchange reserves.

On the contrary, the other camp thinks that the government may delay the IMF programme to the extent possible and ask for help from friendly countries.

The camp asking for the IMF assistance is of the view that the country is facing an acute balance of payments crisis since foreign exchange cover is hovering around two months of imports at the moment.

They are the followers of the twin deficit (fiscal and trade) theory. Keeping in view the twin deficit, the country should adopt austerity measures.

There is a need to curtail the trade deficit by following import compression. The better way to do import compression is depreciation of the Pakistani rupee compared to the US dollar. In addition, there is a need to jack up exports. If exports are not increasing at the desired pace, imports should be suppressed quickly.

On the fiscal front, the government has to curtail the fiscal deficit. Average fiscal deficit has been hovering around 6% since 2002. Considering the fiscal inflexibility, it is difficult to curtail the deficit at a fast pace.

The usual argument is that wasteful expenditure such as subsidies needs to be curtailed. Public sector enterprises (PSEs) come under attack. The evergreen solution is proposed in the form of privatisation of the PSEs. Has the privatisation yielded desired results in Pakistan? This is a debatable question.

If a newly installed political government curtails the deficit, it will sap aggregate demand, which plays a significant role in propping up the economy. The conditionality clause of the IMF demands that the deficit should be curtailed quickly. This kind of adjustment is not acceptable to the politicians, therefore, the success of such an IMF programme becomes difficult.

On the revenue mobilisation side, there is always a loud talk to broaden the tax base. In order to broaden it, successive governments need to follow the same set of policies which couldn’t happen. Here the case of restricting non-filers of tax returns from buying new motor vehicles is instructive where the government ultimately surrendered. This, in turn, will promote non-compliance with the taxation mechanism.

The other camp justifies the current stance taken by the government to delay the IMF programme as the government is continuously knocking at the doors of friendly countries to get balance of payments support.

This camp has asked for a slow adjustment of the fiscal deficit keeping in view the ground realities. It has also suggested phased implementation of the adjustment of utilities such as electricity and gas.

Although the government has heavily cut down the development budget in the current year, the current expenditure has kept on increasing.

The precious foreign exchange is coming in the form of much-needed installments, which has slowed down the pace of import compression. Despite a massive depreciation of the rupee, the import compression is taking place at a normal pace.

In a nutshell, both camps almost converge at the point that the IMF programme is the eventuality. Both camps have proposed more or less similar kinds of expenditure rationalisation programmes. The key difference is the timing to take the programme.

The most important question in this context is whether the government would be able to solve the structural problems faced by the balance of payments or not. Interestingly, the probability of the next time is high.

Indefinite restriction means airlines will be forced to continue making costly detours

Pakistan has restricted its airspace indefinitely over fears India will launch another attack, forcing international airlines to take costly and time-consuming detours.

“This is a matter of national security. There can be no compromise,” a senior Pakistan government official told the Financial Times.“I realise this is a problem for airlines but Pakistan’s security must come first.”

Another senior government official said an air strike by the Indian military in northern Pakistan last month had “definitely” prompted the move to close the airspace. A day after the Indian strike, Pakistan’s air force fired at two Indian fighters.

“We are still concerned that the Indians may go for another adventure as Prime Minister [Narendra] Modi tries to get votes to win the election,” the official said, referring to India’s national poll, to be held over seven weeks from April 11. “Our reading is that the Indians are still thinking of attacking Pakistan in the name of targeting terrorist locations.”

Imran Khan, Pakistan’s prime minister, has also voiced fears of an imminent attack. On Friday he told a gathering near Peshawar that “there is a need for Pakistanis to remain vigilant”.

He added: “We are repeatedly asking India to have bilateral trade and resolve the issue of Kashmir through talks but, unfortunately, a political party in India wants to win the election by spreading hatred.”

The airspace closure is affecting about 800 commercial and cargo flights a day, said Mark Martin, founder of aviation company Martin Consulting, who estimated that the shutdown has already cost airlines and airports more than $1bn.

“If you picked up your ticket six months ago and now your flight time has gone up by 90 minutes, someone has to pay for that extra fuel and airlines have to take the financial hit,” said Mr Martin, who is based in the Indian city of Gurgaon. “It’s definitely a challenge.”

India carried out an air strike on February 26 on a suspected terrorist training camp in Pakistan in response to a suicide bombing earlier last month that killed 40 Indian paramilitary troops in Kashmir. The air strike marked the end of New Delhi’s longtime policy of strategic restraint towards Islamabad.

Analysts said the air strike had bolstered Mr Modi’s re-election campaign by putting national security back on the agenda and burnishing his strongman image.

Since India’s attack, Pakistan has restricted a portion of its airspace near the eastern border with India, disrupting the operations of international airlines flying to Europe and Asia. The closure has forced Pakistan’s domestic carriers to fly a longer western route along Iran, adding to the flying time between the capital Islamabad and the southern port city of Karachi.

“There has been a severe impact, most of the flights have to take a longer detour. It’s created scheduling and networking issues, flights are getting delayed, some are getting cancelled,” said Kapil Kaul, South Asia chief for the Centre for Asia Pacific Aviation.

After India launched its air strike, there were fears that the conflict could intensify. Mr Khan’s decision to release a captured Indian pilot appeared to defuse tensions but pressure remains high with New Delhi insisting that Islamabad needs to do more to crack down on militants allegedly operating freely on its soil.

Cheers

Last edited by Peregrine on 18 Mar 2019 20:54, edited 1 time in total.

I think there is a misconception here that Pakistan is suffering badly due to the shut down airspace. Actually while it no doubt incurs some losses, the whole place is an aviation backwater, so shutting down the airspace make as little difference to them as somebody spitting paan in it makes to a garbage dump.

OTOH the third party airlines have a massive number of flights overflying their airspace and shutting down the airspace (combined with the usual bullshit narrative in the FT article) is a way to blackmail the world and put some pressure on them to in turn pressure India.

At the end of the day this would depend on how India reacts to that pressure - in the past with MMS or ABV etc we might have buckled, but I think the current govt will just ask them to take a hike and, if they want to pressure someone, go ask Pakistan to stop terrorism.

KARACHI: Pakistani rupee hit an all-time low of Rs139.40 to the US dollar in the inter-bank market on Monday ahead of the International Monetary Fund (IMF) mission’s scheduled visit to Pakistan next month.If I am not mistaken the US Dollar Rate had hit Rs. 144 before recovering to 138-139 Level

The mission was arriving apparently in the wake of Pakistan’s acceptance of the tough conditions set by the IMF for a bailout including “keeping the rupee free from state control,” said Pakistan Forex Association President Malik Bostan in comments to The Express Tribune.

“We expect the rupee to touch 150 by December 2019,” Elixir Securities’ Director Research Hamad Aslam said. “The anticipated depreciation may be in one go any time or gradually by December.”

The rupee has been continuously shedding its value for about a week now. However, it lost a meagre Rs0.21 to Rs139.40 to the US dollar in the inter-bank market on Monday, according to the State Bank of Pakistan (SBP).

“The visit of IMF mission is not a small thing. It gives the impression that Pakistan is about to reach an understanding for the widely debated bailout,” Aslam said.

Bostan said Pakistan had largely covered the financing gap for the current fiscal year. “However, it will require another $7-8 billion in the next fiscal year for which it seems to be going to the IMF.”

ISLAMABAD: Pakistan could become a $2 trillion economy in the next 28 years if it remains steadfast in its reforms and manages to reduce its population growth rate to 1.2%

“With sustained reforms, Pakistan could be a $2 trillion economy when it will turn 100 in the next 28 years,” said the World Bank (WB) Country Director Patchamuthu Illangovan while sharing the main findings of the ‘Pakistan @100- Sharing the Future 2047′ report on Monday.

“The $2 trillion economy means an upper middle-income country where per capita income will be $5,702 but it will have to halve its population growth rate to 1.2% by 2047,” he added.

However, business, as usual, would mean that the size of Pakistan’s economy will be only $1 trillion and the per capita income will be just $2110. By 2047, Pakistan’s population will be 376 million at current growth rate, said the country director. The size of Pakistan’s economy is now only $275 billion.

Bakistan is on a downward death spiral. Nothing can pull them out of that spiral now. Initially it will be slow, just like a large drain bowl being emptied the water level appears to be dropping only perceptibly slow but it gathers speed and when the end comes it will be fast. Extremely fast.

Bakistan is urged by WB to spend less on defense and more on human development. Human development of what? Health? Education (primary/secondary/tertiary?)? At the end it has to trade to employ and absorb its work force and for it to trade properly it has to learn to trade with India and it regards India as its nemesis. And anyway it has vowed to bleed India with 1000 cuts, that will keep their defense spending up.

So end of the day, Bakistan is in a monkey-trap. It cannot trade with India and it cannot spend on education or growing its economy. It falls further into debt trap and a further spiral down for its economy (Bakistan Rupee may hit Rs. 200 to USD by end of the year).

We are helping them in their economic death spiral by keeping the LoC super hot; while at the same time not publicizing our victories because the last thing we want is for pakis to go crying to unkil, iron brother or four fathers for funds for defence. Let them keep their H&D intact and bleed their treasury to restock.